UNINCORPORATED
ASSOCIATION TAXES

QUESTION: Is there is any tax benefit to an unincorporated association if it incorporates as a nonprofit mutual benefit corporation?

ANSWER: Both incorporated and unincorporated associations are required to file tax returns. There are no differences when it comes to federal taxes. An unincorporated association is treated the same as a corporation for tax purposes. There is a difference when it comes to state taxes. An unincorporated association is not subject to the $800 minimum corporate tax. Corporations in California pay an annual franchise fee of $800 for the privilege of doing business in the State. However, many associations qualify for an exemption from that annual fee. In some instances, the exemption may be retroactive, resulting in a refund of prior payments.

For CPA firms that specialize in homeowner associations, see "Accounting" in the Service Directory

Updated by ADAMS KESSLER 6/7/2008